The upgrade to ‘B-‘ with a stable outlook reflects expectations of sustained economic reforms and strengthens Pakistan’s dollar bonds.
Key Takeaways:
i) Fitch Ratings has upgraded Pakistan’s long-term foreign currency issuer default rating to ‘B-‘ from ‘CCC+’, citing increased confidence in the country’s ability to maintain reforms under the International Monetary Fund (IMF) loan program.
ii) Pakistan’s dollar bond maturing in 2026 experienced a significant rise, reaching its highest level in over a month following the positive rating revision.
iii) The upgrade is underpinned by the IMF’s initial approval of $2.3 billion in loans to Pakistan, part of a broader program aimed at stabilizing and bolstering the nation’s economy.
Islamabad, Pakistan – April 16, 2025 – In a recent report by Bloomberg, titled “Fitch Upgrades Pakistan Rating After IMF-Backed Reforms” and authored by Kamran Haider and Malavika Kaur Makol, Pakistan’s economic outlook received a significant boost as Fitch Ratings upgraded its credit rating. The article highlights the rating agency’s increased confidence in Pakistan’s commitment to economic reforms under its agreement with the International Monetary Fund.
Fitch Ratings announced the upgrade of Pakistan’s long-term foreign currency issuer default rating to ‘B-‘ from ‘CCC+’, accompanied by a stable outlook. According to the Bloomberg report, “[The upgrade] reflects confidence that the South Asian country will be able to sustain reforms under a loan program with the International Monetary Fund,” as stated by analysts including Krisjanis Krustins. Countries holding a similar ‘B-‘ rating include Angola, El Salvador, and Iraq.
The positive development had an immediate impact on Pakistan’s financial markets. The nation’s dollar bonds experienced an upswing, with the bond maturing in 2026 reaching its highest value in over a month following the rating upgrade, according to Haider and Makol.
This upgrade comes on the heels of the IMF’s initial approval for $2.3 billion in loans to Pakistan. This financial support is part of a broader loan program secured by Pakistan last year, extending until 2027.
The Fitch analysis suggests a positive trajectory for Pakistan’s debt management. “[Fitch sees] a gradual decline in the government’s debt to GDP over the medium-term reflecting tight fiscal policy, nominal growth and a repricing of domestic debt at lower rates,” the Bloomberg article quotes the Fitch analysts. They further noted that while “[g]lobal trade tensions and market volatility could create external pressures, but risks are mitigated by lower oil prices and Pakistan’s low dependence on exports and market financing.”
This upgrade comes on the heels of the IMF’s initial approval for $2.3 billion in loans to Pakistan. This financial support is part of a broader loan program secured by Pakistan last year, extending until 2027. As reported by Bloomberg, this development bolsters Prime Minister Shehbaz Sharif’s strategy to revitalize the country’s economy, which has been recovering from a precarious financial situation.
Fitch Ratings announced the upgrade of Pakistan’s long-term foreign currency issuer default rating to ‘B-‘ from ‘CCC+’, accompanied by a stable outlook.
The Bloomberg report also highlights the significant reforms undertaken by Pakistan in recent years. These include increases in gas and electricity prices aimed at reducing financial losses in the energy sector, as well as a crackdown on illegal foreign exchange markets, which contributed to a record high in remittances last month, according to the article.
The stable outlook accompanying the ‘B-‘ rating suggests that Fitch anticipates Pakistan will maintain its commitment to these reforms and navigate potential economic challenges effectively. This upgrade is a positive signal for investors and stakeholders, indicating a reduced risk associated with Pakistan’s sovereign debt.
